How will the DOMA decision in 2013 in U.S. v. Windsor affect your 401(k) or (m) safe harbor plan? Well, the Internal Revenue Service (IRS) issued Notice 2014-37 on May 16, 2014 addressing this exact issue. In this notice, they provide the following background information:
“Notice 2014-19 provides that the deadline to adopt a plan amendment pursuant to Notice 2014-19 “is the later of (i) the otherwise applicable deadline under section 5.05 of Rev. Proc. 2007-44, or its successor, or (ii) December 31, 2014. Moreover, in the case of a governmental plan, any amendment made pursuant to this notice need not be adopted before the close of the first regular legislative session of the legislative body with the authority to amend the plan that ends after December 31, 2014.”
“Under Treasury Regulations, a 401(k) or (m) plan must be adopted before the beginning of the plan year, and must be maintained throughout a full 12-month plan year. Exceptions are granted relating to the reduction or suspension of safe harbor contributions, or in guidance of general applicability published in the Internal Revenue Bulletin.”
However, may 401(k) or (m) plans adopt a mid-year amendment pursuant to Notice 2014-19? Notice 2014-37 answers “yes.” The plan will not fail to satisfy the requirements to be a 401(k) or (m) safe harbor plan merely because the plan sponsor adopts a mid-year amendment pursuant to Notice 2014-19.
If you have any further questions regarding your 401(k) or (m) plan, please speak to an employment lawyer.
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